Aside from asking the right questions, you also need to be asking the right people.
Anyone working in the financial industry will have questions that are specifically related to corporate finance. These questions may help you learn additional information about a company, industry or market, and that extra information could prove critical when the time comes to make the next investment or cutback decision. Ultimately, whether you are running a business, investing in one, or just studying how corporate finance works, asking the right questions is essential to receiving the education you need to move forward.
What's the Future Earning Potential of X?
Whatever project or consumable good (e.g. a new website, lipstick, television, etc.) a corporation is involved in, it is essential that the project or good increases the future earning potential of the corporation. Whether a company is privately or publicly owned, all activities undertaken need to move toward maximizing the profitability associated with the company's operations. This type of question about the earning potential of a product may seek a qualitative or quantitative answer -- that is, a theoretical explanation explaining why "X" is good for a company needs to be backed by hard data demonstrating that it will likely be a good investment.
Where Do We Invest Next?
A company that does not change grows stale and will eventually be overtaken by other, more innovative companies within the industry. Even companies that have been successful over a long period do so while continuing to be considered amongst the most innovative in their industry. For example, according to a list of Fortune's "Most Admired Companies" as stated by the leaders of corporations in 2006, General Electric is the most admired company. Since corporations must always be focused on the future, a very common corporate finance question is one that seeks to peg where the next opportunity for investment and company growth may be.
Where Can We Cut Back?
At the same time that a corporation needs to expand with new products and opportunities to grow, it also needs to cut back on wasteful areas to operate more efficiently and effectively. Jack Welch, widely regarded as one of the most successful CEOs of all time, brought GE from $14 billion in value to $410 billion when he stepped down, by letting go of tens of thousands of employees that were contributing to unprofitable activities. Questions about corporate cutbacks should be based on sound budget analysis -- that is, each program and operating activity should be combed through by management to make the corporate financial engine leaner.
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